December 2016 | Gayatri Kamath
Steely and sturdy
Business excellence has been the spark for a transformation exercise at Tata Steel Processing and Distribution, an enterprise that has matured further with every forward step
When a steel company talks about creating mobility solutions for its industrial customers, quite like a consumer products company — components for cars and construction equipment ordered via an app, and the buyer’s plant getting tracking and delivery alerts from a GPS-enabled truck — the idea seems a bit ahead of its time.
|Learn how business excellence has opened up new paths and new horizons for Tata Steel Processing and Distribution|
And yet, this is the all-new customer experience being crafted at Jamshedpur-based Tata Steel Processing and Distribution (TSPDL).
Today, TSPDL is India’s largest steel processing company with annual revenues of Rs19 billion in FY16. About 70 percent of the company’s output goes into the highly demanding automobile original equipment manufacturing (OEM) sector. Quality and excellence, therefore, are not mere buzzwords but integral components of the business strategy.
Early on, TSPDL realised that with so many steel product suppliers in the market, it needed to ensure consistent customer-centricity to stay ahead of the pack. This was one of the triggers for the company’s business excellence journey that began in 2003. Since then, TSPDL has been working with the Tata Business Excellence Model (TBEM), as well as total quality management (TQM) programmes, to put this philosophy to work.
Though challenging, the 13-year journey has delivered results consistently for TSPDL. At a time when the global steel industry is in the throes of a depression with steel prices heading south, TSPDL has managed to double its net profit in FY15-16 to Rs490 million, with revenues growing to over Rs19 billion (reflecting a CAGR of 6 percent in the last three years), and while its EBITDA of Rs1.04 billion registered a CAGR of 17 percent. Managing director Abraham Stephanos attributes the company’s stellar performance to an organisation-wide effort to make business excellence a systemic process: “In many ways, TBEM acted as a general management tool for us. From an attitude of compliance on quality, we moved into active participation towards excellence.”
The results soon started to show. For one, the TBEM score started to climb. For another, there were changes in key result areas, such as HR and safety. One of the HR highlights has been the ‘star managers’ programme that engages with high-performers to give them multi-location, multi-function exposure along with on-the-job training. It has helped strengthen the leadership pipeline, with 90 percent of critical positions now filled internally against 68 percent in 2012. “Some of our star managers now head our units,” says Mr Stephanos.
Safety was another key area. “In 2007, we had about 360 loss time incidents, which is an average of one a day,” says Mr Stephanos. By 2015, this figure was down to three-four incidents. Importantly, contract workers are now included in all workplace safety metrics. “Our focus is now on building a strong culture of safety,” says the MD.
In 2014 — a decade after signing on for the TBEM programme — TSPDL received the JRD QV award for crossing the 600 point mark on its TBEM score. “The TBEM journey opened our eyes to new possibilities. Two years ago, we defined a new vision for the company — to be the global benchmark in service excellence,” says the MD.
The Caterpillar push
There was a specific trigger for the new vision — its engagement with Caterpillar, a global leader in construction and mining equipment. TSPDL’s high-tech facility at Tada, Andhra Pradesh, supplies pre-fabricated heavy plate components to Caterpillar. By adopting the latter’s supplier quality excellence process, TSPDL improved its steel quality metric from an error rate of 1,000ppm (parts per million) down to zero — the first steel vendor worldwide to manage this feat. In 2014, Caterpillar recognised TSPDL as among its global best, ranking it a platinum-level supplier. “It was a great achievement, and we are proud of it. But it involved a single plant and a single customer. We wanted to extend these concepts of delivery excellence across the organisation. That inspired us to adopt our new service excellence vision,” says Mr Stephanos.
Breaking the mould
The move towards becoming an organisation built on precepts of service excellence was bold and yet strategically necessary. “Steel quality is no longer a driver of customer loyalty; it is a hygiene factor. We have to deliver a better steel buying experience to our customers. This is the only way to increase share of business and build loyalty,” avers Mr Stephanos.
To do this, TSPDL re-examined its customer engagement process. Typically, the lead time between an order and its delivery could go upto a month, with the customer remaining clueless about when exactly the goods will be delivered. This process is now being made more transparent for the customer. “For each unit, we have started tracking our delivery metrics to make sure that we deliver on-time-in-full (OTIF). Even our customers are surprised when we call up and ask them to fix a date for delivery. It’s never happened before,” says Mr Stephanos.
Delivering OTIF is a mammoth task, which has led to TSPDL rejigging its entire value chain. A year ago, EY was roped in as consultants to help transform the back-end operations. Working to meet a committed customer delivery date meant aligning all operations, including supply chain processes, planning and scheduling processes, logistics, vendors, steel mills, and so on.
A few unique pilot projects have been rolled out to aid the system. At the Faridabad steel processing centre, trucks carrying loads to customers have been fitted with GPS units to track deliveries. At Jamshedpur, delivery trucks were fitted with radio frequency indentification systems so that truck movement could be optimised.
“We have taken the first few steps towards service excellence,” says Mr Stephanos. “The final phase will be the customer interface, such as a digital mobility solution. In the future, there is no reason why the delivery of steel should be different from the way a car or a smartphone is ordered and delivered.”
A journey that began 13 years ago with TBEM has taken on new dimensions and opened up new horizons for India’s largest steel processing company. TSPDL is a changed organisation now, and it continues to change — for the better.
|This article is part of the cover story about the culture of business excellence across Tata group companies in the October - December 2016 issue of Tata Review:|
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